Lesser Gatsby to take over troubled Cell C’s assets

Lesser Gatsby to take over troubled Cell C’s assets

22 May 2020 | Alan Burkitt-Gray

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Troubled South African operator Cell C will split off some of its assets as part of an attempt to restructure its debt.

The company, part-owned by listed mobile commerce company Blue Label Telecoms, will put the assets into a new special purpose vehicle (SPV), to be called Gatsby*. South Africa’s Competition Commission approved the process yesterday.

Cell C CEO Douglas Craigie Stevenson (pictured) told Reuters that this is part of a move to recapitalise the company: “A recapitalisation is an important pillar of Cell C’s turnaround strategy. We are being diligent and thorough to ensure it is a transaction that meets all conditions and continue to engage with all stakeholders.”

Stevenson, appointed acting CEO last year, warned shareholders in July 2019: “Cell C is actively pursuing liquidity, recapitalisation and operational initiatives to ensure that we remain competitive.” Stevenson spent many years with Vodacom in roles across southern Africa before joining Cell C as COO in 2017.

Cell C has a debt of around US$500 million. In October Blue Label co-CEO Brett Levy admitted the acquisition of a stake in Cell C was a bad move. He and his brother Mark left the Cell C board.

It is not yet clear which of Cell C’s assets will be put into Gatsby. The Competition Commission said Gatsby SPV will be controlled by a trust that is yet to be formed.

The move, at least for a time, puts off the likelihood that Cell C will be taken over by its larger rival MTN, with which it already has a roaming deal.

Earlier in the week the Competition Commission was telling the South African parliament that MTN would take over Cell C, though MTN refused to comment on what it called “market speculation”.

 

* Literary note: Gatsby appears to be named after Jay Gatsby, the anti-hero of F Scott Fitzgerald’s 1925 novel, The Great Gatsby. He was a millionaire who’d made his money from bootlegging in the prohibition era.